A new study conducted by two researchers, J. Liaukonyt ̇e and A. Zaldokas, suggests that TV ads can influence investor behavior in real time, leading to a slight boost in trading activity in the advertiser’s stock.
Key takeaway:
“In the 15 minutes after a commercial has aired, the study shows, a number of investors seek out financial information about the advertiser, leading, on average, to a 3% increase in queries to the Securities and Exchange Commission’s Edgar database of company filings and an 8% uptick in Google searches.” [Link]
“This table shows descriptive statistics for 301 publicly traded firms that have placed ads during the time-shifted broadcast TV hours over 2015–2017 Q1. Panel A reports descriptive statistics of advertising data as reported by Kantar Media. Panel B splits this information across 11 GICS sectors. Panel C reports the financial data for the sample firms as reported in Compustat, CRSP, and Thomson Reuters 13f database. Panel D reports the total number of SEC EDGAR queries by time zone in our sample. Column (1) totals the queries that exclude IP addresses that have performed more than 500 daily queries, column (2) excludes IP addresses with more than 50 queries, column (3) total queries that come from the IP addresses with more than 500 daily queries that we attribute to bot traffic.”
The researchers further stated in an interview with Bloomberg, “Indeed, our recent research shows that the effects of advertising on investor behavior and stock prices are more far reaching than previously believed.” [Link]
“We found that each dollar spent on advertising translated to roughly 40 cents of additional trading volume in the advertiser’s stock. The effects were most pronounced for trades initiated by retail investors. Overnight stock returns were positive — though they partially reversed during subsequent trading days.” [Link]
In the beginnings it was assumed that conscious attention is necessary for advertising to anchor marketing messages in the brain. Those findings however disprove traditional stock market theories, which rely on the assumption that stock traders make decisions in a completely rational and objective manner, while taking time to synthesize all available information. Various studies conducted by other research groups observed a similar, so called, “primer effect”. [Link]
Let’s turn to Neuroscience for a minute and take a look at how our psyche works.
Pilot & Autopilot — structure of the human psyche
We know today that the human psyche operates on two systems, or better, in two modes:
- Pilot (consciousness) = responsible for all deliberate processes, such as deliberate thinking, conscious image recognition, controlled behavior, planning processes and logic. With about 40 sensations (bits) per second it’s very slow in processing information.
- Autopilot (unconsciousness)= subconscious processes, such as sensory perception, many learning processes, all unconscious emotions, memory, rules of thumb, stereotypes and unconscious images. Those processes are fully automated and continuous. It is highly efficient with 11 million sensations per second — basically a super-computer — , responding to symbols (codes), is intuitive, spontaneous, reacts immediately and regulates the entire nonverbal communication. [Link]
Those two constructs are the psychological foundation and are the basic drivers that determine the buying and decision-making behavior. Both components have an immediate effect on behavior and cannot be separated. Our attitudes are the results of intertwined interaction between those two systems working in tandem. [Link]
Numerous studies have demonstrated that subliminal stimulation involving concepts have measurable consequences on behavior. Our unconscious paves the way for our actions. As we can see on the results of the study, it is evident that the previously aired ad (subliminal stimuli) triggered certain associations creating an effect on investors stock buying behavior. Based on these findings we can conclude that even our most reasonable thoughts and actions mainly result from automatic, unconscious processes. [Link]
Liaukonyt ̇e and Zaldokas specifically investigated how the effect varies with an advertised brand name similarity to their parent company’s name (e.g.,Wendy’s (brand) and The Wendy’s Co(parent company) versus Taco Bell(brand) and Yum! Brands Inc(parent company). [Link]
The results:
“Products with names that matched or shared similarities with the name of the company itself spurred greater reaction.” [Link]
The experiment demonstrates that unconsciously noticed ads, even without an explicit reminder, have a significant influence on investor’s choice of a stock.
How can cryptos benefit?
The crypto markets can capitalize on the trials and errors along with refined ways of attracting investors that have proven to work in the traditional stock markets. This means that imitating some of the best-of-breed practices when it comes to organic adoption, liquidity and price appreciation. These only occur when there is execution on:
- Product market fit
- Market size
- Revenue
- Profit
Here are a few good examples of crypto companies that make the mark on all four points above:
Vector Space Biosciences (SBIO) is a company imitating this best of breed approach when it comes to awareness within the crypto sphere. You know you’re on the right track when you’re technology is featured in HBO’s show Billions in season 5 episode 6. Even better is a new video taken on the NASDAQ floor of Vector Space Biosciences here.
Vector Space Biosciences, Inc., (SBIO) along with its scientific collaborators, design, develop and launch biological small satellites (CubeSats) for purpose of generating and interpreting unique datasets related to microgravity and radiation. This leads to the development of countermeasures against diseases associated to stressors connected to protecting and repairing the human body during spaceflight.
This includes using a network of scientific data engineering pipelines for building targeted language models resulting in real-time datasets which power Artificial Intelligence (AI) operations in space biosciences, biotechnology and pharmaceutical development.
Working with leading scientific labs in the areas of human aging, cancer, and nutrigenomics, our goal is to accelerate the process of new hypothesis generation and novel discoveries in space biosciences, including materials sciences in the area of nanotechnology and nanomedicines.
Developing advanced large and small language modeling/AI technologies, our platform is capable of producing more than 100,000,000,000 different real-time datasets for the purpose of accelerating discoveries. Innovations in space biosciences result in products and services for all industries, including the financial markets, more importantly, new forms of precision medicine for all humankind.
Their partnerships include Oracle, NVIDIA and Morningstar and are described in their latest press release: Small Satellite (CubeSat) Launch Provider, Vector Space Biosciences, Announces New Drug Repurposing Platform Using Data Generated in Space
Additional press releases from Vector Space Biosciences can be found here.
With all that in mind, I suggest to keep a close eye on Vector Space Biosciences. For most accurate SBIO price action go to LBank.
Other cryptocurrencies that have been operating successfully based on strong partnerships are:
(Crypto profile credit: Coingecko)
Conclusion
As usual, be sure to do your due diligence (DD). If you need any pointers on good DD practice and procedure this document titled “ Structured Cryptoasset Due Diligence (DD) Services “ might help. Happy trading!
